The Trinidad and Tobago government will hold a three day retreat in Tobago this week, amid concerns that there is need for a serious re-examination of the existing socio economic policies occasioned by the coronavirus (COVID019) pandemic.
Prime Minister Dr. Keith Rowley, speaking on a television program on Tuesday, said also that the recent decision by the International Monetary Fund (IMF) to allocate an estimated US644 million to Trinidad and Tobago from the largest allocation of Special Drawing Rights (SDRs) in its history, will also be an agenda item at the retreat.
Minister “This pandemic has affected us three times as bad …and it is so widespread and all pervasive in that the global financial crisis basically was dealing with people who had money and was losing money and those who did not have, have nothing to lose,” he told the “Brighter Morning with Bhoe” program hosted by former government minister Dr. Bhoe Tewarie.
“But this pandemic affects every body…in the world and it has a much larger damaging impact on the world’s economies and that is why the IMF has come in. I mean why you read, like here in the CARICOM (Caribbean Community) some countries are pointing to a huge percentage of loss in GDP (gross domestic product), here in Trinidad and Tobago we are still trying to assess the extent of the loss of our GDP simply by being in this pandemic situation.
“If you look at what is happening in the big economies in the world, how much hundreds of billions are loss simply because having to respond to the pandemic, here in Trinidad and Tobago when we stayed home for a month …earning nothing, shutting down everything, you could imagine the effect that is having”.
Crisis Many Times More Devastating
Rowley told his audience that the Washington-based financial institution has recognized that this is a crisis that is many times more devastating than the global financial crisis that was experienced in 2009.
“We are very happy for their response and our share of that support is going to be utilized much to our benefit,” Rowley said, adding that from time to time when “one speaks of the IMF, they speak of the old guard they know, but on this occasion I hope you understand being a member of the IMF has its great benefit.
IMF managing director, Kristalina Georgieva, said that the US$650 billion SDR allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis.
“SDRs are being distributed to countries in proportion to their quota shares in the IMF. This means about US$275 billion is going to emerging and developing countries, of which low-income countries will receive about US$21 billion, equivalent to as much as six per cent of gross domestic product (GDP) in some cases,” she said.
“Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the crisis,” she added.
Funds will strengthen Trinidad and Tobago Position
Rowley said that Trinidad and Tobago would use its allocation “mainly to strengthen our position going forward encouraging export marketing, ensuring that we can fund the recovery that has to be done in a variety of ways and it is going to prevent us from having to borrow as much as we would have had to borrow from other sources if we were without this kind of support.
Asked whether the new funding would also be used to assist in both import or export substitution for local businesses, Rowley replied “absolutely.
“What we will be using it for is to ensure that what we wanted to and would have been funded by the scare resources or the expensive we will have to find. We are going to have to support those who are engaged in that activity (export marketing) and it will be whatever that is to help us get into the market place and to earn from that market”.
He said the funds would also help to provide a number of businesses that would have used up their resources to sustain them during the pandemic and allow for their re-entry into the market “strong and productive.
“We have to come up with modules of expenditure, very carefully administered to allow this funding to be had without it being a largess or a gift which does not solve the problem and we already doing that and I could tell you the Cabinet meets in retreat next week in Tobago for three days and this is the kind of thing we will be focusing on.
“There will be certain shifts that we will have to make,” Rowley said, noting that much of government’s revenue is spent on subsidies.
“I know once you mention that people begin to see oh hardship because without these subsidies you are going to have hardship…but if we don’t address these things we end up requiring more and more of that kind of support which is unproductive,” Rowley said, noting that Trinidad and Tobago had spent an estimated TT$30 billion (one TT dollar=US$0.16 cents) on subsidizing fuel in recent years.
“If one is to be honest and ask ourselves look at where we are now. Suppose we had not done that and we had used most of that money either in savings or in doing other productive things, wont we have been better off because we subsidize fuel for everybody in the country.
Subsidies and Disruptions
‘You buy a million dollar car and the state is subsidizing your fuel. Is that a good idea? And we have to address these things frontally and fairly and honestly and this pandemic is pushing us in that direction if we were not going there before because there is no other way out.
“We have to do things differently and there might be some disruption before, but we hoping as we do them we will minimize those disruptions, the inconvenience and the hurt and build a new platform that gives our children a more confident future,” Rowley told the television program.
CMC
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